As your company grows, your internal systems should evolve. By the Young Entrepreneur Council (YEC)
As you begin to hire more employees, you'll have to develop internal systems so you can track their progress as it relates to your company goals. So we asked eight founders who have already built these systems: How do you handle performance reviews at your company? Any advice for a founder just getting started with a more formal process?
1. We Assign Mentors
We assign a Career Manager (CM) to each employee when they join. CMs set expectations and define goals during onboarding. Apart from on-the-job coaching and feedback, CMs also collect 360-feedback and share strengths and areas of improvement. Twice a year, every employee performs a self-evaluation. We have one-on-ones to provide constructive feedback with specific next steps so they can constantly improve.
2. We Make Them Frequent and Short
The all-too common quarterly or annual review has a lot of pitfalls. By the time you meet, any problems may have already become a disaster. Why wait till then when you can nip problems in the bud now? You should implement weekly one-on-ones to boost success. I have brief meetings (fifteen minutes maximum) so I can steer my employees in the right direction as early as possible.
3. We Stress Our Core Values
Determine what core values and goals you would like to see for each employee and then measure and discuss with those in mind. Whether it's customer service, honesty, innovation, timeliness or any other value, it is important for each employee to exemplify each value or your organization will fall short.
4. We Set SMART Goals
When we first implemented reviews at ZinePak, the goals and metrics were loose enough that employees felt they could "prove" their results ("I DID improve web traffic!"). A game changer was implementing S.M.A.R.T. goals (specific, measurable, attainable, realistic, and time-bound). This showcased clear expectations and results. Employees could tell us whether or not they met them in a review.
5. We Have Open-Dialogue Performance Reviews
While we cannot meet with everyone in person due to having some remote staff, we do still have video calls. We create a dialogue about the performance review rather than just telling employees what we think about how they did. It's more about how we did together and what we could both do that would get us closer to the list of goals we use to measure performance effectiveness.
6. Use the "Good-Bad-Good Sandwich" Approach
Have KPI’s available so you are critiquing everyone on an even playing field at first. Next, think about your team member individually and address that person and how they can specifically up their game. I go with the "Good-Bad-Good Sandwich." Start with what they’re doing well, transition into what they can improve on, and end with another positive.
7. Check In as Often as You Can, While You Can
At a small company (we have six full-time employees) there's no excuse not to give real-time feedback daily. We aim to do this in as constructive a manner as possible, and my partner and I ask for open feedback about how we're doing as leaders in return. We then do more formal quarterly reviews where employees critique themselves and we discuss their career paths and goals.
8. Know How to Phrase Your Feedback
Unlike other times in business, performance reviews are personal. The key to successfully mentoring employees to grow is to empower them to be in charge of their own outcomes, i.e. "How do you think you did this year?" After you've initiated this discussion, you'll also want to be ready with solutions that are specific and direct to each individual. For example: "Yes, I agree. What would help you? How about..."
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.